Multimedia

Video

The U.S. midterm elections results might not change America's foreign policy, but the world will be watching to see how Democratic President Barack Obama and the new Republican-majority Congress interact.

The average Briton did not follow the elections race by race, but there is an understanding on the streets here that what happens in the United States matters.

Accountant Tony Hazell says the results were not a surprise.

"It is going to make Obama's task of managing the country a lot more difficult," he said.

Ryan McNamara works in recruiting.

"America is still a fairly dominant power so whatever you guys do actually impacts us, especially with some of the financial markets," said McNamara.

The markets in London and Germany were relatively unmoved by Tuesday's vote. Trader Oliver Roth with Close Brothers in Frankfurt says a political impasse might be good.

"Economically, Wall Street likes this situation because we are focused on a short-term track and we like to have a secure environment," he said.

Analysts say U.S. Treasury policy is driving the markets more than politics. Dana Allin at London's International Institute for Strategic Studies says losses by President Obama's Democratic Party might refocus the administration's attention on international affairs.

"There is a possibility that he will become more of a foreign policy president, because of this," said Allin. "But I do not see any areas where he is likely to have a huge success."

"Ratification of the New START treaty with Russia now becomes less likely and I do not think many European states are going to find that very good news," he said.

Allin says that dealing with Iran's nuclear program is one area where President Obama might need to yield to the new Congress.

"It is probably going to give him less flexibility in negotiations with Iran, for example, because on the Iranian nuclear issue, if there was ever to be a deal, it would require a relaxation of American sanctions that are mostly Congressionally mandated," said Allin. "And I think this is going to be a harder line Congress on that issue than the one that it is replacing."

The Israeli deputy foreign minister and Palestinian foreign minister say they do not believe that U.S. policy will change and that the Obama administration will continue working for peace.

But Danny Danon of the conservative Israeli Likud Party says the elections sent a clear message to Mr. Obama.

"He should take his hands off Jerusalem; he should take his hands from the Israeli people," said Danon. "And I hope he will understand that he cannot impose his wishful thinking peace plan on the people of Israel."

When President Obama came to London in April of last year on his first European visit as president, hopes were high that he would bring change to the world. Now, analysts say, Britain and its allies will watch to see whether Mr. Obama continues to reach out internationally or turns inward to address challenges at home.